A new study has shown that households increased borrowing from banks for domestic use by 7.5 percent between March 2021 and March 2022.
According to data from the Central Bank of Kenya (CBK), the rate of borrowing went up to 10 percent amid the high inflation rate.
Households borrowed KSh 486.6 billion under 12 months up from KSh 452.4 billion in March 2021 topping amounts borrowed by key sectors including agriculture and real estate.
According to the date, there are about 10.89 million personal and household loan accounts by the end of 2020.
Notably, many individuals owned over one account.
Fuliza, KCB M-Pesa and M-Shwari cumulatively disburse more loans to individuals for household use than commercial banks.
Kenyans borrowed KSh 502.6 billion from Fuliza, a 43.1 percent increase from KSh 351.2 billion borrowed in the previous year.
On the other hand, Kenyans borrowed KSh 46.3 billion and KSh 86.1 billion from KCB M-Pesa and M-Shwari respectively.
In February 2021, a report compiled by Kenya National Bureau of Statistics and the Central Bank of Kenya showed that the number of Kenyans taking loans from financial institutions has risen by 10 percent since 2019 reaching about 14.4 million.
The report informed that while most people applied for loans and could calculate the interest charged, the decisions to apply were also fuelled by survival.
Elsewhere, banks and saccos rejected several loan applications, mainly due to lack of collateral, guarantors or proof of regular income, and bad credit history or negative listing by a credit reference bureaus (CRB) in Kenya.
The survey showed that majority of people cited the need to meet day-to-day household expenses, emergencies such as burial and medical, and education as the main motivations for saving.
